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Altogether now, altogether now

By then it may be up against Virgin Digital's UK service, also pursuing the same Windows Media-oriented market. In addition to Napster, a number of smaller services launched in the UK this year, including Recordstore, Mean Fiddler and... er... Oxfam, all building services around Microsoft's software. As did UK retail giants Tesco and Woolworths. In the States, Wal-Mart got in on the act.

There's no doubt devices like Creative's Zen Micro, and iRiver's H10 and H300 series, will widen demand for WMA tracks, but it's going to take a lot to slow Apple's momentum. While Apple sells on what is effectively an exclusive basis to iPod owners, all the other services will be battling each other for the WMA market. If Apple ships a Flash-based iPod as anticipated, then it's going to be harder to derail it.

More the merrier

And no other vendor has embraced the add-on market in the way Apple has. It's addition of the dock connector to the iPod line has paved the way for a raft of after-market products from both computing accessory specialists like Belkin, MacAlly and Griffin, through audio experts like Bose, Harmon Kardon and Altec Lansing, to the likes of Burberry and Gucci. No other MP3 player vendor has seen such a business ecosystem accrete around its products. Quite apart from making the iPod expandable and thus more attractive, it helps tie buyers to the platform.

Attracting users hasn't proved a problem for the P2P services, despite the Recording Industry Ass. of America's aggressive legal campaign against file-sharers, which has targeted over 7000 named and unnamed individuals to date. Its equivalent in the movie business, the Motion Picture Ass. of America (MPAA) belatedly began a similar move, pursuing not only P2P users but people distributing unauthorised movie copies <a href="/2004/12/14/mpaa_vs_bittorrent/"using BitTorrent.

Kazaa crisis

Both the MPAA and the RIAA took their complaint against P2P software developers to the US Supreme Court, having this year lost an appeal against a 2003 District Court ruling that stated Grokster, Kazaa and co. were not liable for the actions of their users. Kazaa owner Sharman Networks finally went on trial in Australia, accused of contributing to copyright infringement. Repeatedly delayed throughout the year, the trial arose from a series of information-seizing raids that took place in February. The trial is over, but the verdict has yet to be announced.

As if in preparation, P2P companies began to consider alternative business models that would raise the reputation above the situation where they're synonymous with online music piracy. Grokster, for example, began talks with Sony about setting up a licensed, monitored file-sharing network. The service, Matchboxxx, is expected to be powered by Snocap, Napster-creator Shawn Fanning's attempt to build a P2P world where copyrights are maintained, artists get their due, labels take their cut, but users can download and share files will abandon. Fanning kicked off the scheme by signing a licensing deal with Universal.

Look to the future now, it's only just begun

Digital downloads are here to stay, and 2005 will be characterised by more, bigger attempts to get mainstream buyers as well as natural P2P users to pay for downloading songs. Apple's vertical model - own the hardware and the content supplier - is likely to remain pre-eminent, but only while it's the hardware that leads the business. Microsoft's PlaysForSure scheme may be able to unite disparate hardware vendors and content sellers into a whole that has the synergy of iPod and iTunes, but it seems unlikely. In Europe, losing the right to bundle Windows Media Player 10 with the OS may cost MS dear.

That said, the weight of WMA-based services, many from strong music-related brands, may cause the balance to shift from hardware to content. And the effect of video remains unclear: will video devices wrest consumers' attention away from the iPod next Christmas? Or are portable media centres to become little more than the pocket TV of the 21st Century?

We shall see, gentle reader, we shall see... ®

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